Dilip Kumar Jha  |  Mumbai  February 11, 2013 Business Standard

Branded tea market to double in five years

Rapid change in consumer behaviour may support the market more than its unbranded segment

Rapid change in consumer behaviour is likely to support the branded tea market more than its unbranded segment. Consequently, the branded tea market is expected to double in the next five years.

With 20 per cent compounded annual growth rate (CAGR), the branded tea market constitutes nearly 55 per cent of the market size with around 980 million kg of India’s overall output. A recent study by the Associated Chambers of Commerce and Industry of India (Assocham) forecast India’s tea market to touch Rs 33,000 crore by 2015 from Rs 19,500 (in 2011).

“The total branded tea segment in India, currently valued at Rs 6,000 crore, is expected to double in the next five years. The domestic coffee consumption, too, has been continuously growing at an annual average rate of six per cent and is largely on account of a thriving independent upscale café culture,” said Priti Kapadia, director of Sentinel Exhibitions Asia.

Sentinel Exhibitions is the organiser of the World Tea and Coffee Expo (WTCE), scheduled on February 15-17 in Mumbai. Domestic coffee outlets, which have a lot of appeal for the new generation, are set to double within three years, fuelled by the foray of global players such as Starbucks and Dunkin’ Donuts in India. WTCE is India’s only trade show dedicated to the hot beverages sector.

Companies in the last decade have positioned tea and coffee as recreational products, which proved beneficial in attracting the younger population. Furthermore, the focus on high-protein, low-sugar diets is stimulating demand for green tea, ground coffee and artificial sweeteners, which have shown strong signs of promise over the past three years, Priti added.

The Assocham study further said that with nearly 600,000 hectares under tea cultivation, the domestic tea industry is growing at a CAGR of about 15 per cent.

India is the world’s largest consumer, second largest producer and fourth largest exporter of tea after China and accounts for nearly 30 per cent of global output. Nearly 25 per cent of tea produced worldwide is consumed in India, said the study.